2.0 Reference: None. Explain the cost/benefit of the privatization for BC Hydro and for the BC Hydro customer. RESPONSE:

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1 Information Request No...0 Dated: 2 March Reference: None..0 Please explain the rationale for the restructuring and privatization. What were the costs for the restructuring and privatization? What are the savings, if any? BC Hydro has not been privatized. It has re-structured, through the creation of internal lines of business and service organizations, and through the transfer of certain functions to BCTC. It has also outsourced certain administrative functions to ABS. These changes are driven in part by provincial energy policy (particularly the creation of BCTC - see the Energy Plan at website: and in part to reduce costs (particularly the Accenture arrangement and the lines of business model). Please see BC Hydro s response to SBCC IR #.2.0 for the cost of restructuring related to the creation of BCTC and the ABS outsourcing arrangement.

2 Information Request No..2.0 Dated: 2 March Reference: None.2.0 Customer service has been an integral part of BC Hydro. Approx.,500 Explain the cost/benefit of the privatization for BC Hydro and for the BC Hydro customer. Please see the Outsourcing Business Case enclosed with BC Hydro s response to BCUC IR #.92.0.

3 Information Request No..3.0 Dated: 2 March Reference: None.3.0 Customer service has been an integral part of BC Hydro. Approx.,500 What was the head count at BC Hydro of those transferred through the privatization to Accenture Business Services? Are these full time jobs? What is the existing head count at Accenture - are these full time jobs? What is the projected head count for each of the next 0 years - will these be full time jobs? The number of BC Hydro employees who transferred to ABS on April, 2003 was 557, this includes 28 part time employees. Information regarding the existing and projected headcount at ABS is not provided to BC Hydro.

4 Information Request No..4.0 Dated: 2 March Reference: None.4.0 Customer service has been an integral part of BC Hydro. Approx.,500 Are ABS customer services to continue to be provided by employees residing in British Colombia? Will these customer service jobs continue to be in BC? Please see BC Hydro s responses to CFPP IR #.H7.0 and CFPP IR #.H8.0.

5 Information Request No..5.0 Dated: 2 March Reference: None.5.0 Customer service has been an integral part of BC Hydro. Approx.,500 What are the costs charged to BC Hydro by Accenture? Which of those charges are passed onto BC Hydro customers? How are these regulated? What control does BC Hydro have on the charges to BC Hydro and/ or BC Hydro customers? Please see BC Hydro s responses to BCUC IR #.94. and #.94.2 for a description of the costs charged by ABS. All of the service charges are included as costs in the Application that is before the BCUC for approval. The charges are controlled by contractual agreement, which provides predetermined prices and savings over the contract term. These prices have a guaranteed saving to ensure BC Hydro is provided with the same service at lower prices over the term of the contract. In addition, BC Hydro has established a review and approval process to ensure invoices received from ABS reflect received services at the correct price.

6 Information Request No..6.0 Dated: 2 March Reference: None.6.0 Customer service has been an integral part of BC Hydro. Approx.,500 Is Accenture regulated by the BCUC and/or by its Rates and Tariffs? Accenture is not a public utility under the Utilities Commission Act, and does not provide public utility services through a BCUC approved tariff or otherwise.

7 Information Request No..7.0 Dated: 2 March Reference: None.7.0 Customer service has been an integral part of BC Hydro. Approx.,500 If customer service deteriorates, what actions can be taken by BC Hydro or its customers against Accenture? ABS is obligated to provide the services at or above the levels performed by BC Hydro prior to the Contract Commencement Date. To this end, a Service Level Agreement has been adopted that sets out the prescribed service level standards or performance thresholds for customer service. On an ongoing basis, ABS will improve service levels where required through the benchmarking process, customer satisfaction surveys, and annual performance reviews. There are a number of remedies available to BC Hydro in the event ABS fails to perform to the established service standards. These include: Service Rectification: If ABS fails to meet service levels, it must perform a root cause analysis and use commercially reasonable efforts to correct the problem. Monetary Credits: For certain critical service levels, ABS may be required to compensate BC Hydro in the form of financial Service Level Demerits. Claims for Damages suffered or losses incurred: If ABS is in breach of its service obligations and BC Hydro suffers damages or losses, BC Hydro may claim for damages. Partial Termination of a Service Category: From time to time, BC Hydro may elect to insource, resource or discontinue a discrete Service function. Termination of the MSA: In certain cases, including material breach, ABS failure to meet BC Locus Requirement, and Critical Service Level Defaults, BC Hydro may terminate the Master Service Agreement.

8 Information Request No..8.0 Dated: 2 March Reference: None.8.0 Customer service has been an integral part of BC Hydro. Approx.,500 Is Accenture subject to the Province's FOI legislation? Accenture is not subject to the Province's FOI legislation. The Freedom of Information and Protection of Privacy Act ('the FOIPP Act') applies only to public bodies and a public body is defined as any entity named in Schedule 2 of the FOIPP Act. Accenture is not named in that Schedule. ABS is, however, subject to the Personal Information Protection Act ('PIPA'), which came into effect on January 0, Any BC Hydro data (employee, customer, or business related) in the custody of ABS remains under BC Hydro's control and, consequently, remains subject to the provisions of the FOIPP Act. Any personal information in ABS's custody that is not within BC Hydro's control (e.g. information related to ABS employees or, perhaps, the customers of utilities other than BC Hydro for which ABS does work) is subject to PIPA.

9 Information Request No..9.0 Dated: 2 March Reference: None.9.0 Customer service has been an integral part of BC Hydro. Approx.,500 Accenture provides customer and shared services to each of BC Hydro's strategic business units, as well as BCTC - how are these costs regulated? How are BC Hydro and BC Hydro customers assured they are not overcharged? Please see BC Hydro s response to OPEIU IR #.5.0.

10 Information Request No..0.0 Dated: 2 March Reference: None.0.0 How are the costs of IPP's regulated to BC customers? Are IPP's bound by BC Hydro Rates & Tariffs? BC Hydro s rates are regulated by the BCUC. In setting those rates the BCUC considers the costs that contribute to those rates, including the costs to BC Hydro for IPP purchases. Please also see BC Hydro s response to OPEIU IR #..0.

11 Information Request No...0 Dated: 2 March Reference: None..0 Why do IPP's, as energy providers, not have to go to the BCUC independent of BC Hydro? IPPs are regulated by the BCUC to the extent that they fall within the definition of "public utility" or to the extent that they are parties to "energy supply contracts", as defined in the Utilities Commission Act, subject to any exemption orders issued pursuant to that statute.

12 Information Request No..2.0 Dated: 2 March Reference: None.2.0 What if IPP's are not able to provide power as committed? Does BC Hydro have to keep in reserve power sufficient to meet IPP commitments? What is the impact on BC Hydro or BC Hydro customers should IPP's not be able to meet their commitments? BC Hydro plans for contingencies such as non-delivery of IPP commitments or forced outages by adhering to the Western Electricity Coordinating Council (WECC) recommended reliability planning criteria. These planning criteria are explained in BC Hydro s response to the BCUC IR #.65.. Thus, given the number and diversity of the portfolio and the presence of adequate reserve margin, the impact of an IPP not able to deliver on commitments on BC Hydro operations and customers would be minimal and the impacts are mitigated by the terms and conditions of the EPAs some of which contain provisions for liquidated damages. For summaries of EPA contractual provisions, please see BC Hydro s response to BCUC IR #.4.4.

13 Information Request No..3.0 Dated: 2 March Reference: None.3.0 Why can't BC Hydro generate new BC Hydro power? What is the rational for IPP's to provide new power generation? Is there a cost saying to BC Hydro customers? For information on relative costs of supply please see the 2004 Integrated Electricity Plan.

14 Information Request No..4.0 Dated: 2 March Reference: None.4.0 Is BCTC subject to the Province's FOI legislation? Are IPP s subject to the Province's for legislation? The BC Transmission Corporation ('BCTC') is subject to the Freedom of Information and Protection of Privacy Act ('the FOIPP Act'). The FOIPP Act applies to all public bodies. A public body is defined as any entity named in Schedule 2 of the FOIPP Act and BCTC is named in that Schedule. BC Hydro is not aware of any Independent Power Producer ('IPP') that is subject to the Province's FOI legislation. To the best of BC Hydro's knowledge, no IPP is named in Schedule 2 of the FOIPP Act.

15 Information Request No..5.0 Dated: 2 March Reference: None.5.0 As a member of RTO West, will BCTC be able to charge BC Hydro customers differently than those in the United States? Will this be considered discriminatory under the rules of NAFTA? How does BCTC plan to ensure reliability of the system if RTO West standards are less? Please see BC Hydro s response to BCUC IR #.9.8, CFPP IR #.0G.0 and CFPP IR #.0G3.0. While the details of the Beginning State of RTO West have yet to be fully developed, the current expectation is that each participating transmission provider, including BCTC (if a decision is made to participate in the RTO framework) will develop Company Rates that will be charged to load for the purpose of recovering the embedded cost of each transmission system. This approach is not expected to be considered discriminatory under the rules of NAFTA. Reliability standards are addressed not by RTO West but by the North American Electric Reliability Council and the Western Electricity Coordinating Council.